27 September 2017 
Amanda Darley, Head of Operations and Engagement
Good news for anyone who was concerned about the Advocate General's (AG) opinion in the Iberdrola Inmobiliaria Real Estate Investments (Iberdola) case earlier this year. The AG determined that VAT incurred by Iberdola on upgrading a waste water pump station owned by a local authority (so that it had capacity to deal with a new holiday park being constructed by Iberdola) did not relate to Iberdola's future taxable supplies so was irrecoverable. The Court of Justice of the European Union has disagreed with the AG and confirmed that because Iberdola would have been unable to make taxable supplies from the holiday park without the work being undertaken on the pump station, there was a link between the pump station work and Iberdola's taxable supplies.
However, we are left with a little uncertainty as the Court added that it is for the national court to determine if the works went beyond that required to connect the taxpayer’s buildings to the waste water pump station and if they did go beyond this, the direct and immediate link to Iberdola's taxable supplies is partially broken and an apportionment is required.
